I hope this letter finds you doing well. Can you believe we are already coming up on the mid- point of 2008? It seems like a long time since the Real Estate “BOOM” came to an end, doesn’t it? In the first half of this year we have seen double digit depreciation in the housing market. Foreclosures are at an all-time high. Multi-families are being sold for pennies on the dollar. Many people are having trouble qualifying for loans. Things have definitely come a long way in the last few years. Obviously, there are people for whom this is not a great market, but for others, it’s an ideal environment for doing business.

First time buyers have a wide array of properties to choose from. There are many low interest loan programs and even opportunities to get additional monies for rehabilitation or energy efficiency improvements. Buyers can rest assure, the Zarrella Team will find you the right property. We are out previewing homes every day, finding the best deals for our clients. We understand the challenges of financing and will help you find the right loan program. Also, if you want that diamond in the rough, but don’t have the contractor’s network to fix it up, we can help. We have reliable people to help in any situation.

This is also a great time for anybody who is “moving up”. If you are selling a home, and buying a superior home at the same time you can really make out. When selling, the Zarrella Team can get you the best deal the market will bear. We can assist you on presenting your home in its’ best light, and advise you on a smart pricing strategy. Conversely, when buying we can help you take advantage of the market conditions. There are a limited number of buyers, and many sellers “have” to sell their homes. This leaves us in a strong negotiating position.

Last, but certainly not least, this is a GREAT time for investors. Multi-families can be bought with instant cash-flow. You can buy single-families, that when rented, more than cover the monthly expenses. Prices have retreated to numbers we never thought we would see again.

Market conditions have changed in 2008 and will continue to do so. One thing that won’t change is the Zarrella Team’s commitment to our customers. We have the knowledge, experience, and resources to help you reach your goals.

Happy New Year!

2007 was a tumultuous year for the real estate industry. The effects of the sub-prime market are being felt throughout our area. The number of foreclosures are up, home prices have fallen, and transactions our down. This is not good news for those who bought in the last few years and need to sell, but for everybody else this is a great market.

I know what you are thinking; and no, I haven't bumped my head. Let me explain myself. Obviously it's a great time to buy. Prices are low and interest rates are low, hovering around 6% for a conforming thirty year loan. Rates are even less for a qualified first time buyer. This market is also good for people who are moving up. The money that a seller "loses" at sale is less then what they will "save" purchasing more house. Believe it or not, there are investment properties you can buy now that have a positive cash flow. People can create a lot of wealth for themselves by owning just a few of these types of investments for the long term. Also, there are a number of “flips" or rehab properties available, where you can make money on a short term investment.

As you can see, the market's not bad - it's just different. Prices are always going to rise in the long term. Owning a home you can afford is never a bad investment.

You can keep up to date with the local real estate market by listening to me on The Rhode Island Real Estate Insiders radio program Saturday mornings at 9:00 on 99.7 FM or 790 AM The Score. Each week my co-host, Daniel Gervais, and I go over the current market conditions, as well as bring in industry professionals to help our listeners save and make money.

Should a buyer get a home inspection for a home they are buying? Should a seller order a home inspection prior to putting the property on the market? There are advantages for both.

Simply put, a home inspection is a visual examination of both the physical structure and major systems of the entire home including: walls, ceilings, floors, decks, exterior covering, the roof, foundation, insulation and ventilation, plumbing, electrical, heating and air conditioning. It is not an appraisal to validate the value of a home, nor a pass/fail exam. A third-party inspector will give a report on the physical condition and suggest repairs.

Buyers

For buyers, a home inspection clause in the written offer that makes the purchase contingent upon the findings can provide peace of mind. If a serious problem is found, it allows room to renegotiate the purchase price or “opt-out” of buying the home altogether. However, this is usually uncommon. Typically, the seller will already have told the buyer about any major problems.

More often, inspections reveal less serious defects that aren’t enough to warrant backing out of the transition. However, knowing about these minor problems can prevent major disasters down the road. In addition, if specified in the inspection clause, the cost of the repairs can be at the seller’s expense.

Another advantage to having a home inspection is it offers buyers an opportunity to become familiar with their new home and learn about maintenance to help in its upkeep. Although not required, it’s recommended that buyers be present during the inspection. This allows them to observe the inspection; ask questions about the condition of the home; and receive an objective opinion.

Sellers

For sellers, conducting a home inspection (or pre-inspection) before listing their homes puts the control back into their hands.

When the buyer inspection finds problems, it can impede negotiations and cost the seller more in repairs. By having a pre-inspection, the seller can help eliminate any surprise findings after an offer has been made. The seller can make repairs before placing the home on the market and possibly even increase the value of the home.

A pre-inspection can also serve as a great marketing tool. Sellers are required by law to disclose any known defects in the home. Having a pre-inspection report available for buyers tells them that the seller has nothing to hide. It also gives them a clearer picture of the condition of the home.

If there are major problems found during the pre-inspection, it gives the seller an opportunity to disclose the condition up-front, making it less likely for the buyer to pull out of the deal or try to renegotiate the price.

Knowing the true condition of a home can bring peace of mind to buyers and sellers; and be one less hurdle in the home buying and selling process. Ask your real estate sales professional for a list of certified independent home inspectors in your area.

If you’re ready to buy a home and can afford it, now is a great time to buy. Mortgage interest rates remain very low, buyers have a lot of inventory from which to choose and long-term homeownership continues to be one of the best ways for the typical American to build wealth.

Don’t let all of the negative media attention about the “mortgage meltdown” keep you from pursuing your homeownership dream. Mortgage industry woes are primarily limited to subprime loans and other types of creative and comparatively risky financing products but there is plenty of conventional financing available for qualified homebuyers and interest rates remain at historically low levels.

Indeed, the market has changed. It’s gone from a frenzied seller’s market to calmer buyer’s market. When the national median home price dropped for the first time on record, the decline made huge albeit misleading headlines. For starters, there is no such thing as a national real estate market. All real estate markets are local and driven by local factors that include the local economy, housing supply and demand factors and other attributes like geography. The slight decline followed years of unprecedented steep home price appreciation. Corrections in markets that experienced exorbitant home price appreciation were expected and signal good news for buyers. Right now there are many homes from which to choose and in most areas buyers don’t have to deal with the harried and hurried competition of multiple bids.

Prospective homebuyers have some time to shop inventory and thoroughly compare home types and prices, amenities, neighborhoods, commutes and other important real estate-related features. And buyers have stronger price negotiation power as sellers compete for their attention by offering concessions or other incentives.

While all real estate markets have ups and downs, Americans continue to consistently build wealth through homeownership. According to the NAR:

On average, the value of a home doubles every 10 years. During the past three decades, home values have increased an average of 6.6% per year.

The average homeowner today has 36 times the wealth of the average renter. Homeowners are essentially paying themselves when they pay their mortgages and this means they’re building equity. Homeowners also benefit from some real estate-related tax write-offs like mortgage interest.

Sixty percent of the average homeowner’s wealth is their home’s equity. For homeowners who’re in their homes for the long-term, home equity typically is their single largest source of wealth.

Because every market is different, it’s a good idea for potential homebuyers to contact a local real estate specialist to learn more about what’s happening in his or her community and real estate market. The bottom line in real estate doesn’t change – if you’re ready to buy and can afford to make a long-term homeownership commitment, it’s always a good time to buy!

Buyers are drawn to homes that appeal to their senses. This is important to remember when preparing your home for an Open House. Through sight, sound and smell, buyers should leave your home with a lasting impression. Here are some tips to showcase your home in the best-possible light.

Exterior

Start outside by inspecting the front of your home from across the street. Does it have curb appeal? It should look inviting, with a trimmed lawn and flowerbed and a freshly painted front door. Polish door handles and knockers and replace worn items such as a rusty doorbell. Consider adding a new doormat and flowering plants at the entrance.  Do the windows need cleaning? Be sure to remove oil stains from the driveway.

Next check the side and back yards. Add some flowering plants to the back as well. Rearrange the outdoor furniture to look inviting. Put away gardening tools. Tidy around the grill area.

Interior

Now focus on the inside of the home where cleanliness, space, smell and lighting are key. First, get your house in tip-top condition by cleaning and clearing away clutter. Steam clean and vacuum the carpet. Make sure your floors are waxed and shiny. Touch up nicks on walls and make sure the porcelain sinks and tubs and metallic fixtures shine. Your kitchen and bathrooms should pass the white glove test. Be conscious of any lingering odors such as smoke, pets or strong-smelling foods. You may need to air out your home prior to the Open House. Consider grinding fresh lemons in the garbage disposal or even baking chocolate chip cookies. And don’t forget to empty all trashcans.

Next, set the mood. You want buyers to be able to picture your home as their own. Consider rearranging the furniture so that rooms look more spacious. Add accessories from rooms with too many furnishings to those that appear bare. Look at your countertops in the kitchen and bathrooms and the tops of your bureaus. Do they seem cluttered? Clear away and store as much as possible. The idea is to make your home appear spacious.

Lighting is also an important factor in creating an inviting atmosphere. Bright lights provide a cheerful environment and make a small space appear larger. Pull back all the drapes and open the blinds. Turn on all the lights. Make sure all the light sockets have working bulbs and install the maximum-wattage bulb that is safe for that fixture. For rooms that you want to have a warm, cozy feeling, use softer lights.

Don’t forget little touches such as fresh flowers, lighted candles in the bathrooms, new logs in the fireplace, or a bowl of fresh fruit on the kitchen counter. You may even want to set your dining room table with color-coordinated table settings.

An Open House is a terrific way to show your property to many people in a short amount of time. However, keep in mind that buyers may see seven or eight homes in a single day. The most memorable home will be the one that seemed the brightest, the most spacious and the most cheerful. So, don’t rely on buyers to use their imagination. Help them capture it. Work with your real estate professional to get more tips on creating an unforgettable home.

The market is ripe for buyers right now. Interest rates, although slightly higher than this time last year, are still at an all-time low, and the National Association of REALTORS® predicts that 2006 will be the third all-time best year in real estate. So naturally you should be telling your landlord goodbye and saying hello to your dream home, right?  Not so fast. Certainly, owning your own home has its benefits. But, is the dream of homeownership really one you should pursue?  It all depends on your circumstance and needs.

Buying a home is such a large investment, possibly the largest purchase you’ll make. So, careful deliberation should be made when deciding which is better for you: rent or buy.

The advantages to being a renter is that your monthly costs are fixed. There’s little to no responsibility for maintenance of the property. And, it’s easier to pick up and move to another location. However, the disadvantages are your rent typically increases each year and there is no guarantee that your lease will be renewed. In addition, you don’t earn any equity nor will you reap the tax advantages of owning.

As a homeowner, you have the benefit of security and stability, as well as the freedom to decorate and remodel. Your property also builds equity and you get the tax benefit. However, when the central heating unit breaks or the roof needs replacing, the repairs are your financial responsibility. And, there is always the possibility of losing on your investment if property values go down.

One tool you can use in your analysis is a Rent -vs- Buy calculator that you can find on Web sites such Prudential.com. These calculators allow you to compare the costs of renting and buying. In some cases the amount you spend in rent may be about the same or less than you would pay on a mortgage. However, the tax benefit from owning the home may provide significant savings.

You also need to decide if can you really afford homeownership.  If you are on a tight budget it may not be wise to have the added pressure of maintenance costs, property taxes, and insurance. If your credit rating is in need of repair, or you have a high debt to earnings ratio, now may not be the time to purchase a home. Although you may find a lender, your loan may be at a much higher interest rate using a sub-prime lender. You might be better off taking another year to build your credit score and decrease your debt.

Besides costs, another factor to consider is how long you plan to reside in the home. When you purchase a home, there is a substantial initial investment including the down payment, closing costs, and renovations. It typically takes between five and seven years to recover your initial costs. And depending on your loan payments, it may take a few years before you begin to see a return on your investment.

Your lifestyle also makes a difference for whether you should rent or buy. Will you be able to afford the type of property you want and continue to enjoy the lifestyle you have? Are you starting or changing careers or perhaps you are in a job that requires you to move frequently?

Although homeownership has its benefits, make sure it’s the right fit for you depending on your financial and personal situations.

Title companies provide title insurance services to buyers, sellers, lenders and developers, essentially anyone who has an interest in real estate. Services vary throughout the country, depending on local practices and laws. In many states, title companies handle escrow as well as perform and insure title searches. A title search involves searching public records to ascertain if the seller has the legal right to sell the property. In other states, attorneys conduct title searches.

Title companies conduct a chain of title, which is a review of the owner history of the property, checking for who purchased the property, who sold it, and when. They perform judgment searches to determine whether there are any general liens against the property, as well as tax searches to verify the present status of taxes.

Some title companies conduct on-site inspections to verify lot size, the location of improvements, and evidence of unrecorded easements.
They issue a “Commitment of Title Insurance” to lenders after completion of the title search and they receive instructions and documents for the closing. Title companies also prepare a final Settlement Statement.

If it acts as the escrow holder, the title company receives a buyer’s earnest money, which is deposited in an escrow account until the closing, or final settlement.

As a neutral third party agent of the principals—buyer, seller, lender, and borrower—the title company helps with the transfer of ownership by ensuring that the terms of the transaction are completed. This includes safeguarding all funds (including the buyer’s deposit) and documents. Once all the details have been settled, the escrow holder disburses the funds and documents to the appropriate parties.

Another important role of the title company is to issue title insurance. Although a title search is conducted, it’s nearly impossible to guarantee a title is clear of hidden defects, such as mistakes in interpretation of wills and other legal documents, impersonation of the real owner, forgery, missing heirs, falsification of records and confusion stemming from similar names. Title insurance guarantees the title as reported.

Should hidden defects surface at any time challenging an owner’s rights, the title company will defend the title, in court, if necessary, and cover the owner’s losses up to the full value of the policy.

Indeed, a title company can be crucial to the process of buying a home, so select a company that’s known for service. If you need a recommendation, talk to your real estate professional.

Only for the rare few sellers, simply placing a "For Sale" yard sign on the front lawn creates a line of traffic filled with potential buyers. If you want buyers to see your home, you've got to find them. The key is marketing. To get the most exposure for your home, you should have a marketing plan with clear objectives and specifically outlines the resources that will be used to reach potential buyers.

Each marketing plan should be designed around your property and capitalize on its most desirable features. Therefore, you need to be honest with your real estate professional about the condition of your home, and the final price you are willing to accept for your home.

Next, you need to determine what marketing options work best to reach your desired audience. Generally there are two audiences you are trying to reach home buyers and other real estate professionals. Make sure the plan includes action steps on how each audience will be marketed to.

Seldom is the successful marketing of a property the result of a single activity. Your strategy should include a variety of marketing activities. Using only conventional marketing strategies such as Open Houses, newspaper ads and direct mail can limit your outreach. Most homebuyers now begin their home search online. Having a presence on your real estate professional's Web site and other portals such as Yahoo! Real Estate gives you worldwide exposure. Besides the increased exposure, online listings also allow buyers to get a sneak peek of your home. Therefore, you may want to complement the listings with plenty of photos and a virtual tour, which allows viewers to get a 360-degree preview of your home without leaving their computer.

Also, don't forget the power of email. Sending email flyers or electronic postcard are easy and cost efficient. During your planning, your real estate professional may recommend other marketing tools such as company/broker tours and an Open House.

Work with your real estate professional to determine the best options for your market.

Besides identifying marketing tools, an effective marketing plan will also spell out specific dates for the marketing activities. It should leave room for unscheduled events such as following up with sales professionals or brokers who preview or show the home.

Make sure the marketing plan includes checkpoints, possibly at the 15-, 30- and 45-day marks, to review activity on the home and determine if changes need to be made to the marketing plan.

As the home seller, you should be kept in the loop on activity of your home. The marketing plan should state how you will be communicated with (mail, phone, email, in person) and the frequency (daily, weekly, etc.).

Of course these are just guidelines, but can give you an idea if the marketing plan your real estate professional has proposed to you has to be refined. You need to be comfortable with the marketing strategy for your home. An effective plan will not only put you at ease, but also give your home maximum exposure to increase your chances of a quick sell.

Moving into a new home, but don't want to handle the job of packing or transporting your belongings yourself? Then consider hiring a professional mover. Using the services of a professional can allow you to use your time and energy concentrating on other aspects of your move.

When selecting a mover, make sure that you choose a reliable and reputable company. Ask your real estate professional, neighbors, family and friends for a recommendation. In addition, check with your local Better Business Bureau to see if there are any complaints against the moving company.

Once you have narrowed down your selection, ask the following questions:
How long has the company been in business?
Is the moving agent certified?
How long has the estimator been in the industry?
Is the company insured? Do they have worker's compensation? If not, and one of their workers is hurt in your home, you may end up having to not only pay for your move, but their medical expenses too!

Next, get an estimate for the costs of the move at least eight weeks before your move. For local moves, your costs are usually based on the number of movers and truck multiplied by the number of hours. For long distance moves your costs are charged mainly on the weight of your items and the distance they need to be moved. In both cases, there may be additional components that will factor into the costs.

To get a more accurate estimate, have a representative from the company come to your home to take an inventory of your belongings. Be prepared to give a description of your new residence. Are there stairs or any restrictions?

Get a written copy of the estimate with the costs components detailed out. Examples of moving cost components are packing (labor and materials), special handling of antiques, art and other fragile items, transportation charges, additional insurance while in transit or storage, and accessory charges including number of stairs, distance from the truck to home, ease of entry, etc. Getting a written estimate does three things. First, it will alleviate any surprise charges after the move is complete. Second, it protects you from a would-be unscrupulous vendor trying to understate costs to get your business. And lastly, in most cases a mover can only collect within a certain percentage of the estimate on delivery.

After you have an estimate of costs, schedule a move date no less than two weeks before the move. However, the earlier the better, especially if you are moving during the busy season, May to September. If your move is across states, you may need to plan extra days into your move. This is because most companies' rates on interstate moves are based on fully-loaded trailers. And unless all of your household goods fill the trailer, there may be other household shipments on there as well, so you have to be flexible on the dates for both loading and delivery.

Make sure the mover gives you an estimated time for arrival so that you can have someone at your new destination to receive your items, otherwise your items will be placed in storage and you will have to pay for storage and for redelivery.

Using professional movers can take the stress out of moving day, but make sure you do your homework first.